Skip to Content

Walmart U.S. Sales Beat Forecasts as E-Commerce Sales Get Back on Track

It looks like Walmart’s (WMT) tepid e-commerce growth over the holiday season may have been a blip after all.

The mass merchandise retailer said on Thursday that U.S. online sales had risen 33% in the first fiscal quarter of 2018, well above the pace during the fourth quarter last year, and said it continued to believe e-commerce would be up 40% for the full year.

That came as a relief to investors, who sent shares up 1.4% in premarket trading, given the billions of dollars Walmart has spent in recent years on beefing up its e-commerce muscles to better compete with (AMZN) and on its stores to turn them into effective hubs as Walmart blends the digital with the physical.

Once again, Walmart’s e-commerce numbers did not come at the expense of its store business: traffic to stores was up 0.8% in the quarter which ended April 30, while U.S. comparable sales rose 2.1%, their 15th straight quarterly increase.

“The stores business is getting stronger,” Walmart Inc CEO Doug McMillon said in a statement. “We’re using technology in more ways to simplify work for associates so they can better serve customers.”

Walmart has been busy beefing up its e-commerce in the last year, snapping up online brands like Bonobos and Modcloth, recently overhauling its web site, and adding brands like HBC’s (HBC) Lord & Taylor, while equipping hundreds more of its stores to handle curbside grocery pickup for online orders, and adding many more features to its shopping app.

On the merchandise and physical store side, during the quarter, Walmart expanded its delicatessen offering and changed the layout in its bakery. It also launched new private clothing brands.

What’s more, Walmart has used sophisticated tech to better manage inventory, allowing it to avoid stock shortages in stores while simultaneously avoiding have too much merchandise in stores that slow the flow of new goods or that could lead to clearance sales.

That helped Walmart’s profit: adjusted earnings per share increased to $1.14 per share, beating Wall Street expectations of $1.12 per share, according to Thomson Reuters. Total revenue, including its Sam’s Club and Walmart International units, came in at $122.69 billion, above the $120.51 billion forecast.

At Sam’s Club, which this year closed 10 of its stores, comparable sales rose 3.8%, while at Walmart International net sales rose 4.5% to $28.3 billion, stripping out the effect of currency. Walmart also announced several big international deals as the quarter ended. In late April it said it would sell most of its British grocery chain Asda to Sainsbury. And in early May, Walmart announced a $16 billion purchase of Indian e-commerce firm Flipkart, stepping up its battle with Amazon overseas.